#37 Annie Duke: Getting Better by Being Wrong
Annie Duke, former professional poker player and author of "Thinking in Bets," provides a masterclass in decision-making. She explains how to navigate uncertainty, overcome cognitive biases, and leverage peer groups to improve learning and foster an exploratory mindset.
Deep Dive Analysis
15 Topic Outline
Annie Duke's Unexpected Path to Professional Poker
Early Days of Poker and Societal Perceptions
Psychology's Influence on Poker and Decision Making
Challenges in Learning from Feedback and Pain
The Role of Mental Models in Understanding the World
The Influence of Peer Groups on Learning and Bias
Confirmatory vs. Exploratory Thought Styles
Disagreeing Agreeably and Embracing Uncertainty
Impact of Stakes and Emotions on Poker Decisions
Understanding 'Resulting' and its Innovation-Killing Effect
Improving Organizational Decision-Making Processes
Overcoming Individual Biases in Organizations
Key Takeaways from 'Thinking in Bets'
Annie Duke's Perspective on the Morality of Gambling
Advice to Her 20-Year-Old Self
7 Key Concepts
Syntactic Bootstrapping
This is a linguistic theory suggesting that children learn their first language by having an innate grammar built in, which allows them to understand the meanings of words from the language stream.
Mental Models
These are our internal beliefs and representations of objective reality, which we construct to predict what's true in the world and to act in it with intention. They are essentially our personal theories of how things work.
Identity-Protective Cognition
This describes the human tendency to process information in a way that protects our self-identity and positive narrative of our life story, often leading us to attribute negative outcomes to external factors like luck rather than our own decisions.
Confirmatory Style of Thought
This is a mode of thinking where individuals or groups seek to confirm what they already believe, often leading to a reinforcement of existing priors and a resistance to new or contradictory information.
Exploratory Style of Thought
This is a mode of thinking focused on creating a more accurate mental model of the world, where individuals are open to disagreement, acknowledge their beliefs are in progress, and actively seek to understand different perspectives to improve their models.
Resulting
This is the cognitive bias of judging the quality of a decision based solely on its outcome, rather than evaluating the decision-making process itself. It often leads to misattributing success or failure and hinders learning.
Decision Swear Jar
A conceptual tool where individuals or groups identify specific phrases or thought patterns (like 'I should have known' or 'what a stupid decision') that signal biased processing, and consciously work to reduce them, similar to a physical swear jar.
9 Questions Answered
Annie was five years into her PhD, studying syntactic bootstrapping, when she got sick and missed the academic job market season. She moved to Montana to recuperate and started playing poker for money, guided by her brother, who was already a successful player.
It was unglamorous and on the fringes of society; people often assumed she was a dealer or had a gambling problem, not a professional. She was often met with disbelief when explaining she was the main financial support for her family.
Her study of cognition, decision-making, cognitive bias, and learning in uncertain systems directly informed her approach to poker. She viewed poker as a decision-making problem, focusing on constructing models of opponents and extracting signals from noisy feedback.
The pain of losing, especially when attributable to one's own decisions, feels like an attack on identity. People often choose to avoid this short-term pain by attributing losses to bad luck, which, while preserving self-narrative, is devastating to learning.
A good peer group can create a social contract where members hold each other accountable for accuracy, not just being 'right.' They spot each other's biases, provide constructive disagreement, and reinforce behaviors that lead to better learning and decision-making.
Reasoning to be 'right' involves affirming one's existing beliefs and priors, often through a confirmatory style of thought. Reasoning to be 'accurate' involves trying to construct the most objective truth, viewing beliefs as in progress, and being open to updating them with new information.
When leaders judge decisions solely by their outcomes, employees become risk-averse, fearing criticism for unconventional choices that fail. This discourages innovation, leading to safe, incremental changes that can cause a company to fall behind if the environment changes rapidly.
The three main takeaways are: 1) Say 'I'm not sure' more often to embrace uncertainty and foster open-mindedness; 2) Get yourself a good group to help overcome individual biases; and 3) Be a good time traveler by involving your future self in present decisions to prioritize long-term learning over short-term pain.
She views professional gambling similarly to being an options trader or running a restaurant – it's a voluntary market exchange. She respects individual moral objections but personally applies a 'direct harm' principle, finding it moral as long as participants are not being forced.
18 Actionable Insights
1. Embrace Uncertainty & Probabilities
Acknowledge ‘I’m not sure’ more often and assign probabilities to beliefs, as this naturally views beliefs as under construction, fostering open-mindedness and a hunger for information. This approach makes you a more believable communicator and a better decision-maker.
2. Cultivate a Learning Group
Actively find or create a group of like-minded individuals who commit to an ’exploratory style of thought’ to overcome individual biases. This group should agree to hold each other accountable, focusing on accuracy over being right, and be willing to disagree constructively.
3. Prioritize Long-Term Learning
Engage your ‘future self’ in present decisions, understanding that short-term discomfort from admitting mistakes or exploring bad outcomes is crucial for long-term growth and better decision-making. This means being willing to take the hit in the present to learn.
4. Reason for Accuracy, Not Rightness
Adopt a mindset where your goal is to construct a more accurate mental model of the world, rather than confirming existing beliefs or protecting your identity. This involves approaching situations with the question, ‘Why might I be wrong?’
5. Memorialize Decision Process & Scenarios
Work through decisions by identifying possible scenarios, assigning probabilities to them, and documenting this process. This makes it harder to ‘result’ (judge based on outcome) later and allows for examination of the process, not just the result.
6. Conduct Premortems for Risk Anticipation
Before executing a plan, imagine it has failed in the future and have everyone write down reasons why. This shifts the definition of a ’team player’ to those who creatively identify potential failures, helping anticipate and mitigate risks.
7. Force Dissenting Voices to Argue Opposite Sides
When there’s significant disagreement on probabilities or outcomes within a group, have individuals argue the opposing viewpoint. This deepens understanding, moderates views, and ensures all perspectives are thoroughly explored.
8. Quarantine Advice from Outcomes
When seeking advice on a past decision, explicitly ask the advisor not to be told the outcome. Knowing the outcome distorts the analysis of the decision process, making it harder to get high-fidelity advice.
9. Create a Decision Swear Jar
Establish a personal or group ‘swear jar’ for phrases that signal biased processing, such as ‘I should have known’ or ‘what a stupid decision.’ This helps self-monitor and identify cognitive biases, especially when winning.
10. Separate Tools from Value
In high-stakes situations, view the resources (e.g., chips in poker, money in investing) as tools for achieving a goal, rather than their inherent monetary value. This helps prevent emotional decisions driven by fear of loss or desire for quick gains.
11. Play Within Your Bankroll
Ensure that the stakes of your decisions are at a level where a loss does not significantly impact your overall financial or personal situation. This helps prevent risk aversion or excessive risk-seeking driven by emotional attachment to the money.
12. Avoid Constant Outcome Monitoring
For long-term goals, like investing, resist the urge to constantly check short-term fluctuations. Frequent monitoring of outcomes can lead to emotional distress and poor decisions, even if the long-term trend is positive.
13. Lead by Modeling Uncertainty
As a leader, openly express uncertainty and the ‘under construction’ nature of your beliefs to your team. This fosters respect, encourages team members to share their own uncertain opinions, and improves collective learning and decision-making.
14. Foster Innovation by Protecting Process
Leaders should communicate and act in a way that assures employees it’s okay if a single innovative attempt doesn’t work out. This prevents a culture of ‘resulting’ that stifles unconventional choices and innovation.
15. Gather Comprehensive Contextual Details
When analyzing decisions or problems, ensure you have all necessary specific details and historical context. Lacking crucial information can lead to vague advice and ineffective solutions.
16. Practice Internalized Group Journaling
Even when alone, imagine discussing decisions and ideas with your trusted learning group or different versions of yourself (past, future, advice-giving self). This internal dialogue helps refine thoughts and hold yourself accountable.
17. Initiate Cultural Change Bottom-Up
If you want to introduce new decision-making protocols in an organization, start by finding like-minded individuals and proposing small, actionable changes (e.g., trying a red team/blue team exercise) to leadership.
18. Avoid Sycophants in Leadership
Never follow a sycophant or a ‘yes-man’ who has been in their job for a long time if the boss also hasn’t changed. This suggests a lack of critical feedback and potential for stagnation.
7 Key Quotes
If you really lost because of bad luck, what's the point of the story? There's nothing that you can learn from it.
Eric Seidel
The pain actually gets in the way of learning.
Annie Duke
On our own, we're just biased. And we just have this very natural tendency to process the world in a way that supports our priors.
Annie Duke
To be right would just be I'm going to affirm my priors. To be accurate would be to try to take these beliefs that are in progress and try to move them toward whatever the accurate – you know, an accurate representation of the objective truth was.
Annie Duke
When you make an innovative choice, you're exposing yourself to the risulters. And God forbid it's on a really big stage, like national television at the Super Bowl.
Annie Duke
I think that we confuse confidence with certainty. And we think that if we say I'm not sure or something like that... that in order to be seen as confident communicators, to be competent, to be believable, that we must express things with certainty.
Annie Duke
It's almost like letting the hindsight of your future self become the foresight of today's self.
Shane Parrish
2 Protocols
Creating a Good Decision-Making Group
Annie Duke- Find people who are genuinely trying to get to the truth and improve.
- Explicitly agree on a group charter: focus on accuracy, not just being right.
- Commit to holding each other accountable for biased thinking (e.g., resulting, self-serving bias, confirmation bias).
- Encourage probabilistic thinking and scenario planning.
- Foster an environment where disagreement is viewed as helpful, not a threat, and members are willing to share dissenting information.
Improving Organizational Decision Process
Annie Duke- Communicate culturally that it's okay if a single try doesn't work out, as one trial doesn't provide enough data.
- Work through decision processes with the group, memorializing the decision tree and scenarios.
- Assign probabilities to potential outcomes, understanding that the goal is to get as close as possible, not to be perfect.
- Actively wrap in dissenting voices by creating red teams, forcing people to argue opposing sides, or conducting premortems.
- Memorialize the decision process and expected outcomes to make it harder to 'result' and easier to learn from actual results over time.